By Bodo Ellmers

Negotiations on the outcome document of the Fourth International Conference on Financing for Development (FfD4) came to a sudden close on 16 June, two weeks before the actual start of the conference in Sevilla. This is only the second time that negotiations have concluded prior to the start of the conference: During the second FfD conference in Doha in 2008 and the third in Addis Ababa in 2015, fierce negotiations continued on site.

Talks intensified in the final stretch before Seville. A “final” draft outcome document was circulated to Member States on 12 June to invite final objections. Yet, the so-called silence procedure was anything but silent: Nearly every paragraph drew objections, including 24 out of the 25 paragraphs in the introductory chapeau. Since this section has no operational consequences, it became clear that some Member States were aiming to derail the process itself.  In response to this final round of negotiations, the co-facilitators only made changes to a few operational paragraphs, but these further weakened the outcome document, now called the “Compromiso de Sevilla”.

The paragraph on phasing out fossil fuel subsidies (27i) has been deleted entirely, as well as the specification of asset types to be covered by national and global asset registries (28g). The language around the UN Framework Convention on International Tax Convention was also softened just two months before the first round of negotiations starts: “We support” was downgraded to “we encourage support” (28b).  A similar change occurred in the paragraph on investor-state dispute settlement, where the “we undertake reform" was replaced by “we support efforts to reform” (43l). But the most relevant last minute changes lie in the policy sections on Special Drawing Rights (SDRs) and debt architecture reform. 

Special Drawing Rights: A playbook for what?

Substantial changes were made to paragraphs 54j and k on Special Drawing Rights. While paragraph 54j keeps calling on the IMF to design an SDR “playbook”, it no longer specifies what this book should do. Earlier drafts of the Sevilla outcome were clearer in calling for SDR reform. Lessons learnt on SDRs in recent years are that they came too late to respond to liquidity needs during crises due to complex approval procedures. Also, SDR rechanelling from richer countries to countries in need was painfully slow.

The previous draft version called for “a rules-based approach to recommendations for expediting approval by the IMF Executive Board of SDR allocations; and ex ante agreements to facilitate prompt, voluntary rechannelling of future SDR allocations by countries in a position to do so to countries in need”. Moreover, last-minute deletion removed the invitation for the IMF “to consider approaches that allow SDR allocations that better respond to the needs of all countries”. This was aimed at addressing the inequities of the current quota-based system, in which the richest countries, those with the least need, receive the largest shares.

Debt architecture: Reform or procrastination?

A key controversy on the final stretch was also the UN’s future work on debt architecture, drawing intense civil society campaigning. The original draft outcome document already included a call for an intergovernmental process at the UN, with a key institution-building mandate, as the absence of an effective debt workout mechanism is a key governance gap in the international financial architecture. 

The final language retains the intergovernmental process but weakened its process mandate to making “recommendations”. Critics argue that this could be a Sustainable Development Goals (SDG)-killer, at a time when debt crises strangle fiscal space and derail the implementation of the Agenda 2030 for Sustainable Development. The process is supposed to include a dialogue with the Paris Club and other creditors, and an additional Working Group – now co-convened by the UN Secretary-General with the IMF and World Bank – is expected to promote design and implementation of voluntary guiding principles on responsible sovereign borrowing and lending.

  
The Compromiso de Sevilla is supposed to be adopted by a special session of the FfD4 Preparatory Committee, scheduled to take place this afternoon, 17 June, from 3pm New York time, The session is broadcasted live on UN Web TV.